Legal Gibberish in Tax Return Guidelines.

[Parky]

I was helping my daughter fill in a (Canadian) Trust tax return and one of the questions asked about contributions of property, referring to a definition in the guidelines which reads as follows:-

"Contribution of property – This generally refers to a transfer or loan of property, other than an arm’s length transfer [as defined in subsection 94(1)] to a non-resident trust by a person or partnership. A contribution is also considered to have been made by a person or partnership where they make (or become obligated to make) a particular transfer (other than an arm’s length transfer) as part of a series of transactions or events that includes another transfer or loan (other than an “arm’s length transfer”), to the trust, by another person or partnership.

In these circumstances, the other transfer or loan is considered to be a contribution to the trust by the person or partnership only to the extent that the other transfer or loan can reasonably be considered to have been made for the particular transfer or loan, or the obligation to make the particular transfer or loan."

A gold star for anyone who can understand it!

[vandefrosty]

Tax law in Canada has to deal with multitudes of trust types, and uses language like this to try to ensure multiple forms of income are captured. The resulting ambiguity becomes the problem of Settlors, Trustees and Beneficiaries, rather than the CRA having to spend pages and pages to specifically define every nuance. Regrettably there is plenty in our tax system that works like this.

I can't offer an interpretation of what this specific section means, but you might find something at:
https://taxinterpretations.com/

This site contains published CRA interpretations (usually 'severed letters' that were issued anonymized after answering specific taxpayers queries, or responses to forums held with finance professional bodies) and legal judgements on taxation cases across provinces. Most of the judgments originate in the Tax Court of Canada which does what it says on the tin.

Searching for "Contribution of Property" yields 109 hits. Maybe this will help?
https://taxinterpretations.com/site-sea ... perty%2522

Greg

[Parky]

Thanks Greg,
I did not expect any serious replies, so thanks for pointing out a possible source of interpretations. At least half a gold star awarded!